“Throughout history, it has been the inaction of those who could have acted; the indifference of those who should have known better; the silence of the voice of justice when it mattered most; that has made it possible for evil to triumph.”
Haile Selassie

Tuesday, November 25, 2014

More Ballard Bait and Switch: New Justice Center Now Projected to Cost Taxpayers $2 Billion

Gary Welsh of Advance Indiana has an excellent article on the new proposed Justice Center which was originally portrayed as costing only $300 million to construct. It turns out that was a lie. Deputy Mayor Adam Collins now concedes that the administration had estimated from the beginning the construction cost would be $500 million. Further, by using an outside contractor not only to construct but to own the building, the deal will cost taxpayers upwards of $2 billion over 35 years. Welsh reports:

Indianapolis Deputy Mayor Adam Collins

When the Ballard administration unveiled its plan to use a P3 agreement
to construct a new criminal justice center a year ago through the City's
shadow government, the Greater Indianapolis Progress Committee, it
placed the cost of the new facility at a little over $300 million.
Now the administration claims it knew all along the construction cost
would be $500 million after receiving bids from three foreign-led
investment groups. Deputy Mayor Adam Collins told WTHR's Mary Milz yesterday afternoon the administration had "estimated from the very beginning this facility would cost $500 million."

The true cost is several times that $500 million figure because the City
will be locked into making payments to the private developer for the
next 35 years. The RFP the administration illegally refused to make
public until yesterday pegged those annual fees at $50 million a year.
Collins told yet another lie to Milz in explaining why the
administration refused to at least acknowledge it had told the bidders
the City placed a cap of $50 million on the annual payments. "The reason
we kept quiet is we didn't want to prejudice the market and allow (the
bidders) to think how much we were willing to spend on a particular
facility," Adams told Milz. The only reason to keep it secret, along
with the entire RFP in violation of law, was because the entire bidding
process was nothing but a sham.

Welsh then took the opportunity to look closer at the deal and found the inflation adjustment provision in the deal which members of the mainstream media missed completely in estimating the deal at $50 million x 35 years for $1.75 million.

Anyone with a clue knows these deals always have cost-of-living
allowances. Sure enough, the RFP provided a payment schedule where those
$50 million payments would grow to more than $68 million during the
life of the agreement. Total payments would approach $2 billion, not
$1.75 billion, or about four times the actual cost.

Collins goes on to repeat the outrageous lie that using the third party vendor is cheaper for taxpayers than simply bonding the project and having the city be the owner. Welsh points out why Collins repeats this tall tale:

Collins goes on to tell yet another lie to Milz by claiming the P3
arrangement is cheaper than if the City relied upon traditional bond
financing to build the facility itself. "Even so, Collins said leasing a
facility would be cheaper than the city building one itself." "We're
confident that whichever bidder we choose will provide the taxpayer with
a significant cost savings above and beyond our own estimates," he
said. Anyone with a brain knows that the huge fees built into a P3
agreement to benefit the private developer wind up costing far more than
traditional financing and self-management costs. The P3 costs are at
least 40% to 50% higher. A P3 approach is preferred because the corrupt
politicians don't want to do a straight up property tax-backed proposal
that would be subject to voter approval at a referendum, and because
there is a greater opportunity for more kickbacks to the political
insiders to profit from a P3 deal. Let's be honest.

Unfortunately honest, transparent government won't be a legacy of the Ballard administration, the end of which can not come too quickly.

About Me

I have been an attorney since the Fall of 1987. I have worked in every branch of government, including a stint as a Deputy Attorney General, a clerk for a judge on the Indiana Court of Appeals, and I have worked three sessions at the Indiana State Senate.
During my time as a lawyer, I have worked not only in various government positions, but also in private practice as a trial attorney handing an assortment of mostly civil cases.
I have also been politically active and run this blog in an effort to add my voice to those calling for reform.